After a slowdown due to the Covid-19, Portugal real estate industry has started to pick up, and has become a key destination for real estate investment. In the past few years, the Asian buyers in the Portuguese real estate market have increasingly grown. This is not a surprise, as according to the latest report by International Living, the country has an excellent climate, low cost of living, high quality of life, strong healthcare system, and unendingly welcoming populace. The same report mentions that it is the best-value destination in western Europe today.
Emerging Trends in Europe in 2019, a study conducted by PricewaterhouseCoopers, the capital of Portugal – Lisbon ranked highest as the most attractive city to invest in. In 2019, more than half of all real estate transactions in Portugal were purchased by foreigners. In fact, the Chinese investment in this European haven has only increased.
The following points explain why Portugal continues to be the safe haven of Europe for real estate investors.
Golden Visa Programme – One of the most popular business immigration programs is the Golden Visa programme that has attracted over €4.8 billion through property investment alone. According to Portuguese Immigration and Borders Service (SEF), the scheme has granted visas to more than 20,000 persons (7,885 investors and 13,364 family members) between its inception and August 2019.
According to Georg Chmiel, executive chairman of Juwai.com, since the inception of the programme, the Chinese nationals have taken 60 percent of all Portugal Golden visas issued. Chinese have invested an estimated $ 2.8 billion into Portugal through the golden visa programme.
The advantages of Portugal Golden Visa include travelling visa-free in Europe’s Schengen Area and eligibility to apply for Portuguese citizenship after five years of legal residency.
Real estate prices – The high quality of life and the growing economy in Lisbon attracts the foreign companies and high-net-worth property investors. The other major cities of Portugal are also seeing the same trend which are drawing buyers. The study conducted by PricewaterhouseCoopers reveals that Portugal was not affected by the housing bubble of 1996-2007 unlike many European countries. This meant that the country was not hit by inflationary price increases, thus, allowing it to maintain a low price per square metre in real estate. For instance, according to Statista, a German online portal for statistics, an apartment located in the United Kingdom’s most important city could cost approximately €21,179 per square metre in 2019 whereas the price is only €2,941 per square metre for a Lisbon apartment, according to The Portugal News.
Tax System and protective regulations – The Portuguese government has legislated rules that protect the buyers and the market. As the Central Bank controls the interest rates, exchange rates and inflation the financial risks for investors are low. Moreover, the quick turnover time to purchase property is another attractive factor of the Portuguese real estate market. Furthermore, the Portuguese government has also introduced many tax incentives to attract new investors;
- Granting of “RHN” or Non-Habitual Resident status for foreigners, which exempts RHN holders from income tax for 10 years and a flat tax of 20 per cent for those who work
- No wealth, inheritance or housing tax
- No VAT on rents (with few exceptions)
- Tax exemptions on real estate capital gains, especially if they are reinvested
The growing economy and Political stability – Despite being affected during the Global Financial crisis between 2007 to 2017, Portugal has returned to growth by 2017. This was possible due to its tourism and export sectors. According to the data by Statista, an online business data platform, the unemployment rate dropped from 8.8% in 2017 to 5.93% in 2020.
Further, Lisbon also welcomed its highest ever number of greenfield foreign investments in software and IT, with 10 projects valued at USD75 million, thereby marking the sixth year of growth in this regard.
The country’s spectacular recovery has also seen many international companies such as Google and Amazon setting up their European bases in Portugal, including other European companies namely Volkswagen and Mercedes-Benz, Vestas, Credit Agricole and BNP Paribas.
Moreover, according to a by the Institute for Economics & Peace, titled
“Global Peace Index (GPI) 2019”, Portugal is ranked as the world’s third most peaceful country for the past three years after Iceland and New Zealand.
Growth in rental benefits – Portugal’s tourist numbers have consistently risen for the past decade . For instance, almost 27 million tourists visited Portugal in 2019. As the tourism sector grows, the resulting scarcity of rental properties have driven rentals up. This would benefit the investors with rental properties.
Apart from this, even during the times of Covid-19 pandemic, Portugal is the first European country that has been awarded the title of “Safe Travels” seal by the World Travel & Tourism Council.
Therefore, Portugal, apart from being a safe haven for immigrants who want to enjoy a good lifestyle and clean environment, is also an excellent destination for business immigration and investment. Not only is the country market and investors’ friendly but the perks of easy permanent residency and citizenship has no doubt resulted in increased interest as well as investment in Portugal. Going by the market trends, this interest will only grow making obtaining a Portugal immigration more competitive in the coming years.